Metro board Chairman Jack Evans said Thursday that the jurisdictions that fund the transit agency will have to increase their contributions for the coming budget because they’ve been unable to reach consensus on a long-term funding solution.
“I fear that’s what’s going to happen,” Evans said following Thursday’s board meeting.
Evans said Virginia’s Republican-controlled legislature and Maryland Gov. Larry Hogan (R) continue to be roadblocks to dedicated funding, even though Virginia Gov. Terry McAuliffe (D) this week pledged to include such a funding mechanism in his final budget before leaving office in December.
Instead of having a long-term funding plan in place by July 2018, as Metro officials had hoped, Evans acknowledged it’s likely the discussion of dedicated funding will have to be revisited during the 2019 legislative sessions.
Evans praised McAuliffe for introducing dedicated funding, even if he won’t be able to see the proposal through after his term ends.
“The District’s on board, so that’s not a problem,” Evans said. “So it really comes back to Maryland [and] whether Governor Hogan will input dedicated funding in his budget or whether the legislature on its own will put it in. And we have no indications that either of those things will happen, so that is a real concern.”
Metro General Manager Paul J. Wiedefeld is seeking $15.5 billion over 10 years to support Metro’s safety and maintenance needs, including $500 million in new, annual dedicated funding to bolster the agency’s capital budget. Hogan has proposed $2 billion over four years — split evenly among Maryland, the District, Virginia and the federal government — to cover Metro’s finances in the short term. But critics, including D.C. Mayor Muriel E. Bowser (D), contend the Hogan proposal falls short of the bondable funding source Metro says it needs by July 2018.
Metro stands alone among large big-city transit systems in its lack of a significant source of dedicated funding, which local leaders say could be used to enable long-term borrowing to address Metro’s capital needs.
Meanwhile, the board heard no fewer than three proposals Thursday for how to tackle the system’s most pressing issues. Former D.C. mayor Anthony Williams (D), who now serves as executive director of the Federal City Council, advocated a streamlined Metro board that could swiftly enact major reforms. An economist hired by Metro’s largest union pushed for special tax districts that would tax property owners who live near stations as a way of raising funding. (D.C. officials favor a regionwide sales tax, which has been criticized as regressive.)
And an activist group that enjoys union support, the Save Our System coalition, delivered petitions with 11,000 signatures demanding a trifecta of rider-friendly initiatives: flat fares, expanded service and free transfers.
Although Wiedefeld enjoys broad support among local leaders, he and the board have become targets of resentment from activists and some everyday riders, who gave more than 40 minutes of testimony on issues such as the impact of the fare increases and service cuts instituted in July.
As they look to right the system, regional officials also are seeking guidance from former U.S. transportation secretary Ray LaHood, who is in the midst of a comprehensive study on how to overhaul the agency — with a focus on governance — due next month.
Williams, the former mayor, argued that the combination of an excessively large board, split legal duties and frequent turnover has prevented the panel from making long-term decisions in Metro’s best interests. He said governance is as big a problem as a lack of funding.
“The problems Metro is facing today are not simply the result of chronic disinvestment,” said Williams, who was speaking on behalf of a coalition of 32 major business and civic groups from throughout the region. “While funding is certainly a significant factor, we believe that at their core, these problems are inevitably the product of a governance structure that, as designed, is fundamentally flawed and naturally leads to short-term thinking, which leads to poor outcomes.”
Williams proposed that the board should be “right-sized” and include members who have qualifications in transit, management, finance and safety. Board members’ primary legal responsibility should be to the overall well-being of Metro, Williams said, rather than divided between the transit system and the jurisdictions that appoint them.
W. Edward Walter, chairman of the Federal City Council, agreed with Evans and others that it appears increasingly likely that any decision on dedicated funding will have to wait until legislative sessions in Maryland and Virginia in early 2019.
“I think we have a concern that given where we are at this point in time, and recognizing the change in Virginia [because of the November gubernatorial election], that it may be difficult to deal with the long-term funding solution in the spring of next year,” Walter told reporters after the council’s presentation to the Metro board.
“You may find that the governance piece has to happen first, and then there may need to be some level of funding for a year and then a longer-term solution for funding,” Walter said.
Asked whether such a delay would mean Hogan’s plan deserves serious consideration as a stopgap, Walter said, “Some version of that might make sense at least for next year, because we clearly have a [budget] shortfall for next year, so we’re going to have to solve that shortfall.”
Wiedefeld has said the Hogan plan might be the most realistic approach to keeping Metro’s finances stable, given the political realities.
But Walter added that Hogan’s plan is flawed because it covers only four years and does not include dedicated funding, whereas a long-term, permanent solution is needed.
As officials debated the proposals, Peter Donohue, an economist with San Francisco-based PBI Associates, suggested that Metro’s funding could be stabilized through transit assessment districts, which tax property owners along the system based on how transit service boosts their property value. He argued that this approach shifts “the burden” of paying for Metro from poorer families to property owners who benefit from being close to stations.
“The basic notion is the property values are enhanced by proximity to transit service,” he said. “Those property owners should pay a [share] proportionate to the benefit they receive.”
The union-backed proposal would include tax-exempt parties, who cost the District more than $1 billion in property taxes annually, according to the presentation.
Could it realistically gain traction in an environment where there are already so many reform proposals on the table?
“Realistically, politics is hardly a world of realism,” Donohue said later. “But I do think that one of the attractions we have for our proposal is, one, it makes funding secure. It makes it realible. And it makes it equitable.”
But Metro board member David Horner asked whether the tax district model would drive people away from transit-adjacent property in the long run.
Donohue replied that proximity to transit is an incentive in itself.